Private equity investments jump to $9.1b in 2013: E&Y

Helped by a few big ticket deals, private equity investments in the country surged over 20% to $9.1 billion last year even as deal volumes declined during the same period, says a report.

In 2012, private equity investments touched $7.5 billion.

Global consultancy EY said that PE activity in the country has been range bound with an average of $8.5 billion across 400 deals in each of the last four years.

"2013 witnessed total investment of $9.1 billion across 392 deals... Mainly due to few big ticket transactions," it said.

Total number of deals were higher at 415 in 2012. In terms of value, the top ten deals accounted for about 45% of the total PE investments made in 2013.

"The largest deal of the year was announced in the Telecom space - Qatar Endowment Fund's investment of $1.2 billion in Bharti Airtel. This is the second largest PE investment ever in India," EY said in a statement.

Reflecting change in the deal mix, early stage/venture capital transactions made up for about 46% of the overall count registered last year.

However, EY said there has been slowdown in mid-market deal activities due to "macro-economic slowdown, regulatory issues, governance matters and slow capital investment cycle and exit issues from current investments".

All these led to investors being more cautious, greater deal scrutiny and longer deal processes, it noted.

"Domestic consumption remained the central investment theme with close to 50% of the deals in sectors like retail and consumer, food and agriculture, healthcare, financial services and real estate," the statement said.

The highest number of PE deals last year were seen in the technology space at 80 followed by retail and consumer (50), healthcare (49) and financial services (45).

Meanwhile, new fund raising plans worth $5.1 billion were announced last year whereas the same stood at $10.2 billion in 2012.

From an economic growth and government policy standpoint, there are no significant changes expected until the new government assumes office at the Centre in May/June 2014, EY said.

"And even if it does, PE investors are likely to take a cautious approach to investing leading to moderate activity levels for six to eight months of the year.

"The key focus however has to be on investor returns and exits - Limited Partners (LPs) are closely and critically watching the PE industry's performance in India and the next year or two are likely to define the medium term fate of the Indian PE industry," the statement said.